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AgriBank loan arrears up by 16%

Mon, 16 March 2015 10:33
by Patrick Haingura
Business






The drought season that hit the country in 2013 has seen the Agricultural Bank of Namibia loan arrears going up by 16 % because most farmers could not afford to service their loans.
Auditor-General Junius Kandjeke’s audit report on Agribank shows that the bank’s arrear loan book has increased from N$ 335 million in 2013 to N$ 387 million in 2014.
The increase, the auditor’s report said, occurred despite the implementations of some drought relief measure introduced by the bank during the year which resulted reclassifying some amounts from the arrears, otherwise the arrears could have been higher.
While the Auditor-General noted that the bank has adequate security in place for most of its loans, he stated that the impact of the low rate date collection remains a cause of concern.
In a bid to boost output and enhance productivity of the agricultural sector, (Agribank)  put aside a provisional budget of N$300 million for lending to farmers during 2012.
The bank’s Manager of Marketing Communication Regan Mwazi, said that the bank aimed to assist a minimum of 500 small-scale farmers in communal areas and 300 commercial farmers.
In that year, Agribank’s investment in the livestock sector increased to N$75 million or 30% of the total loans approved.
Between January and November that year, Agribank injected N$271,4 million into the local agricultural sector.
This was an overall  7% increase in the investment compared to the loans it has approved the previous year 2011.
This led to 605 Namibian farmers benefiting and 1 815 permanent jobs and 2 723 temporary jobs were created or preserved.
The amount approved consisted of N$120 million for farm land, N$75 million for livestock and N$37 million for taking over of agricultural loans from other financial institutions. Whereas another N$2,2mil was approved for the housing of farm labourers, with N$6,4 million directed to the improvement of infrastructure.
According to one of the bank’s reports, there was a significant 20,6% decrease in the supply of animals to approved export abattoirs in the third quarter of 2012.
In its reports that year Agribank acknowledged that the purchase of farmland by previously disadvantaged Namibians constituted 44% of the total loans approved.
As a result a total of 32 farms with a combined total of 139 164 hectare were acquired by new owners.
In a statement, this time presented by CEO of the bank Leonard Iipumbu, the bank revealed that it will introduce products that suit specific market segments and raise affordable capital totaling N$500 million for lending to farmers in 2013.  
Recovering of the loans, as the Auditor-General’s report suggested last week, has left a lot to be desired and the trend is expected to continue if new measures are not introduced.  
The Auditor-General also noted that the bank is involved in a number of  legal cases being handled by its legal advisors. One the cases involves four retrenched employees who are suing the bank and challenging their retrenchment, while the other involves an ostrich farmer who is suing the bank for N$ 14 million over a contract the farmer and the bank had entered into.
The bank is also currently appealing a retrenchment award which had ordered the bank to re-instate a dismissed employee, which had further ruled that the employee be paid his salary from the date of dismissal to the date of re-instatement. The bank is also involved in a matter iwth a labour union which is under arbitration within the office of the Labour Commissioner.
On the positive news on in its legal matters, The High Court ruled in favour of the bank and ordered an eviction of an abattoir tenant.